Want to get a motorcycle loan, but don’t know where to start? Check out this quick guide!
Motorcycle loan application: What should you do?
When applying for a motorcycle loan, you need to come prepared. Here’s what you need to know before submitting your motorbike loan application:
Assess your financial capability
Take time to analyse your finances before you submit your application. Look into your current savings, income, debt, and bills to figure out what kind of loan you can afford. Creating a suitable budget is a great first step when applying for a motorcycle loan.
Lenders will also be looking at your finances to ensure that you can afford to repay the motorcycle loan. If you apply for a loan amount that’s too high, you could run the risk of your application getting rejected.
Check your credit score
Having a good credit score and history improves your chances of loan approval. Get a copy of your credit report and check all the details for accuracy. If there are negative entries that seem irregular, see if you can send a dispute letter or or inquiry to clean your credit report to clean your credit report.
If you have bad credit, consider improving it first before submitting a bike loan application. You might have an existing loan or credit card debt that needs a settlement. Pay them off as soon as you can so you can increase your credit score.
Aside from improving your chances of loan approval, keep in mind that a good credit score and clean credit report will also help you get the best interest rate.
Motorbike finance types, repayments, and interest rates
Motorcycle loans work the same as car loans or personal loans. A motorbike loan is just a type of loan that’s used solely for purchasing a motorcycle. Below are the key components of a motorbike loan:
Secured and unsecured motorcycle loan
If a motorcycle loan is secured, it means the motorcycle you purchased using the loan is used as a guarantee or collateral. In case you don’t make your repayments, your motorcycle may be repossessed by the lender. Because of this guarantee, lenders are more willing to provide lower interest rates and more flexible terms.
On the other hand, an unsecured motorcycle loan doesn’t require any asset to be put as collateral. These loans typically have higher rates and stricter loan terms to make up for the added risk to the lender.
Interest rates
Motorcycle loans may come with a fixed interest rate or a variable interest rate. A fixed-rate means you’ll be paying the same interest rate for the duration of your loan term. Your repayments will not change throughout your loan. Meanwhile, a variable interest rate is a variable interest rate means the rate on your loan can change depending on the lender and market factors.
Interest rates for motorcycle loans vary per lender. Your financial situation could affect the kind of rates you get. When shopping around for a low rate motorbike loan, it’s best to check the comparison rates as these include other additional fees and show the true cost of a loan.
Repayment frequency
The most common repayment frequency is monthly. However, it’s worth thinking about going for fortnightly or weekly repayments. Changing your repayment frequency can significantly impact the total interest you pay over the life of your motorcycle loan. Check out how much you can save over time using an online motorcycle loan calculator and changing the repayment frequency.
Additional loan features
Some lenders may offer loan features like balloon payments, extra payments, and the like when you apply for a loan. These additional loan features can help you manage your repayments or save on your motorcycle loan. Having a balloon payment, for example, can lessen your repayments giving you extra cash flow. Consider your options carefully and talk to the lender to learn more about their loan features.
Finding the best motorcycle loan
Ensuring you get a motorcycle loan that suits your finances is a must. Every lender offers their own suite of motorcycle finance products. Some loans may be secured or unsecured, interest rates could be fixed or variable, and loan terms could vary per lender.
To find the best one, you need to do your research and ask around. You could go to a lender’s website to check their rates, visit or call their office to get more information. If that seems like too much work, you could always enlist the help of a finance broker. Finance brokers like Aussie Bike Loans can help you easily find the ideal motorbike loan.
Apply for motorcycle finance with Aussie Bike Loans!
When you apply for a loan through a broker, they’ll take in your finance needs and search for a loan that matches them. No need to shop around and talk to different lenders yourself. Call 1300 889 669 or get a quick quote online and we’ll help you get a good motorcycle loan so you can ride away sooner.
FAQ
Can you get a loan to buy a motorcycle?
Yes, there are loans specifically for those who want to purchase a motorcycle. These motorcycle loans work like other types of personal loans where you pay the principal amount with interest in monthly, fortnightly or weekly instalments for a set term.
Which finance is best for a motorbike?
It depends on what your financial goals are when taking out a loan. A secured motorcycle loan typically has lower rates and better loan features, however, the motorcycle you purchased will be taken as collateral if you fail to make repayments. Unsecured bike loans, on the other hand, don’t require borrowers to put up an asset as a guarantee. However, these loans usually have higher rates.
What is a good credit score for a motorbike loan?
Most lenders look for borrowers with a credit score of 600 and above. If a borrower has a high credit score, lenders are more at ease since they’re seen as less likely to default on a loan.
Can I sell a motorcycle with finance owing?
Before selling a motorcycle still under finance, sellers must ensure they no longer have any financial obligations to the vehicle. Talk to your lender about your plans to sell your bike and discuss how you can move forward.
How much does a motorcycle finance cost?
It depends on the motorcycle’s value and your bike loan’s interest rate. Typically, lenders offer between $2,000 to $60,000 for a motorbike loan with interest rates and fees varying between lenders. You can calculate the total estimated cost of your motorcycle finance by using an online motorcycle loan calculator.
How to calculate motorcycle loan repayments?
You can use a motorcycle loan calculator to get a better idea of how much your repayments may amount to. The estimated repayment value is based on the information you put in.
Is there a processing fee for motorcycle loans?
Some lenders may have processing and application fees. The cost varies depending on the lender, but most processing fees are around 1% to 4% of the loan amount.
Can I get a bike loan with a bad credit score?
You can still get a bike loan even if you have a bad credit score. There are lenders that offer bike loans specifically designed for those with poor credit ratings called bad credit bike loans. You can talk to Aussie Bike Loans for more information on your motorcycle finance options.
